Alphabet is increasingly launching “moonshot” projects as independent companies — here’s why

Alphabet’s X moonshot factory is changing how it brings ambitious tech projects to market, increasingly spinning them off as independent companies rather than keeping them within the Alphabet corporate structure, X’s head honcho, Astro Teller, revealed at TechCrunch Disrupt this past week.

The strategy relies on a dedicated venture fund that exists only to invest in X spinouts, and in which Alphabet is only a minority investor. “If Alphabet was the only LP, the fund would be inside Alphabet, and then when they invest something from X, it would still be inside Alphabet,” Teller explained onstage. “So Alphabet can be a short LP, but if it’s more than a short LP, we’re undoing the thing we’re trying to accomplish.”

That fund Series X Capitalwhich has raised more than $500 million and is led by Gideon Yu, a former YouTube executive and Facebook CFO. Bloomberg first reported the fund’s existence last year. Unlike Alphabet’s other investment arms — GV, which invests heavily in early-stage startups; Capitalage, which supports growth-stage companies; and Gradient Ventures, which invests in AI startups — Series X capital is legally bound to invest exclusively in companies spun off from X.

The approach represents a meaningful evolution for X, which has historically turned successful projects like Waymo and Wing into standalone Alphabet subsidiaries. Teller said the lab has learned over the past decade that while some moonshots benefit from Alphabet’s resources and scale, others “may go quickly and not really benefit from being part of Alphabet because they’re so different.”

“Landing it just outside the alphabet membrane, where we can be very tight with them, have a lot of strategic co-benefits with them, but not necessarily control them, makes sense,” he said.

In Disrupt, Teller explained that the spinout strategy only works because of X’s ruthless approach to intellectual integrity, including a culture that actively celebrates promising ideas by killing them.

X defines a moonshot as having three specific elements: it must try to solve a huge problem in the world, offer a product or service that can make that problem disappear, and use breakthrough technology that creates a “glimmer of hope” that the team at X can solve that problem. Critically, Teller said, “If someone proposes a moonshot and it seems reasonable, the company is not interested, because it, by definition, would not be a moonshot.”

What about ideas that meet these criteria? X examines them mercilessly, looking for reasons to kill them, Teller says. “If you propose something and it sounds pretty wild, it has those three elements, and it’s a testable hypothesis, for a small amount of money, we can learn something about whether it’s small. more A little crazier than we thought less Crazy than we thought,” explained Teller. “If it’s a little crazier than we thought, great, high five, let’s put a bullet in its head and move on.”

That approach requires separating people from their ideas, which is why Teller says he doesn’t even know who started most of the projects at X, including Waymo, the self-driving car company, and Wing, the drone delivery company now dropping off Walmart packages in about six U.S. cities. “If we’re going to explore something, and you [as the lead inventor] Seems like ‘it’s my baby’, how likely am I to practice true intellectual honesty? He said to the bored audience.

In practice, this means X tackles the hardest parts of projects first, actively looking for reasons to stop them The result is a brutal 2% hit rate that the teller frames as a feature rather than a failure. X has killed more projects than it launched, including entire categories that once seemed promising, such as copywriting AI tools that foundation models eventually absorbed.

All that experimentation and failure can be costly. The spinout structure solves a practical problem: While X previously had to find outside venture investors to spin off at least 51% of a business from Alphabet, creating a fund that “deeply understands us” and is “legally obligated to invest in things that come from us,” Taylor said, X can keep the spinout process orderly.

Despite the emphasis on separation from ideas, X employees have significant skin in the game when projects spin out. Financial incentives are substantial for those working on projects leading to independence. “You and the rest of your team are going to get a piece of that company,” Teller said. “If you had started in your garage at that stage of funding, you would have achieved as much without taking any risk in between.”

Pitches to potential X employees are also clear about these trade-offs. “Your four or five standard deviations of upside is going to be big on the outside, I grant you that,” Teller said at Disrupt. “But if you come to X, what you can do is a card counter of innovation with us, no fear and no financial risk to yourself.”

X employees are paid like other Google employees, with no equity in early-stage projects, because “it’s not even a company; it’s an idea we’re trying to learn,” Taylor explained. It removes the financial pressure that prevents founders from killing their own ideas. “You can say, ‘Hey, that’s not raising our average, let’s throw it out,'” Teller explained. “And since you’re not betting on your kids’ college funds, it doesn’t scare you.”

X has created at least two companies in 2025: Taara, which develops wireless optical communication technology, and Heritable Agriculture, a biotech company that uses machine learning to accelerate crop breeding. Previous spinouts that raised external funding include Malta (renewable energy storage), Dandelion (geothermal heating), and iyO (AI-powered earbuds).

On the eve of Disrupt, X announced his new Moonshot company: the wind“A new AI platform to help real estate developers, the architecture and construction industry, and cities solve the complexities of new building projects,” it describes itself. Asked onstage about what makes this particular AI platform a “moonshot,” Teller pointed to the size — and scope — of the problem.

“The built environment accounts for about 25% of the world’s solid waste, [and] About 25% of the world [carbon dioxide] Output It literally depends on Maslow’s hierarchy of needs – it’s where we live, where we spend most of our time. It is a large part of the world’s GDP output. So it will be difficult for more important as an industry.”

You can catch our full conversation with Taylor hereStarting at the 6:08 minute mark.